Steady Yields Reflect Pre-CPI Caution
U.S. Treasury yields are flatlining as traders position ahead of Friday’s inflation data. The benchmark 10-year yield is holding near 3.974%, while the 2-year and 30-year yields are unchanged at 3.457% and 4.549%, respectively. With all other economic reports suspended, the CPI release will be the sole driver of rate expectations ahead of the Fed’s October 29 meeting.
Fed funds futures show a 97.3% probability of a 25-basis-point cut, down slightly from 99.4% the previous day. Analysts suggest a softer inflation reading would give the Fed room to ease more aggressively, while a stronger result could slow that path.
Sterling Weakens, Yen Recovers on Fiscal Signals
UK inflation data fell 0.4% to $1.3318 after UK inflation data underwhelmed at 3.8%, reinforcing expectations of a potential December rate cut by the Bank of England. Meanwhile, the yen edged higher to 151.85 against the dollar following confirmation that Japan’s new Prime Minister Sanae Takaichi will pursue a large stimulus package. Traders are watching for coordinated policy action with the Bank of Japan, whose next meeting is set for October 30.
Market Forecast: Dollar Likely to Hold Range Into CPI Release
With the DXY holding above the 98.714 threshold at mid-session and no fresh data to drive direction, the index is likely to remain rangebound. Traders will look to Friday’s CPI as the next volatility trigger. A stronger reading could support a move toward 99.563, while a downside break below 98.714 may expose weaker levels. Until then, the 98.714–99.139 band is expected to contain price action.
More Information in our Economic Calendar.
